Good morning, ladies and gentlemen. Welcome to Annual General Meeting of Shareholders of the Fiducian Group. My name is Indy Singh, the Executive Chairman of the company. Today's meeting is being held at our offices at 1 York Street, Sydney, and online via the computer-shared platform. This allows shareholders, proxies, and guests to attend the meeting in person and virtually. In addition, shareholders and proxies have the ability to ask questions and submit notes. First of all, I would like to introduce you to the individuals that are also in attendance: your Directors, Frank Khouri, Sam Hallab at the other end, and Kerry Skellern in the middle. In addition, we also have in attendance our General Counsel and Company Secretary, Mr. Paul Gubecka, sitting there. Now, Paul hasn't been too well, but he's come and he wants to attend, and thank you, Paul.
It just shows the dedication our people have to this business. Our Group Chief Financial Officer, Mr. Rahul Guha, surprisingly, is not unwell, and our company's Auditor, Mr. Andrew Reeves from KPMG, sitting in the second row at the back. They will be able to answer any question relevant to them. The quorum is now past the appointed time of 10:00 A.M., and Mr. Gubecka has advised me that there is a quorum through attendees at 1 York Street and on the computer-shared platform. I declare the meeting, which is to be held at a reasonable time and place convenient to shareholders, open. Questions can be submitted at any time. To ask a question, you may select the messaging tab within the computer-shared platform or, alternatively, directly ask a question to the channel. The computer-shared platform provides guidance on how to lodge any questions.
Please note that while you can submit questions from now on, I will not address them until after we have put forward the financial report and resolutions for consideration at this meeting, after which we will address all questions together, one after another. Please also note that your questions will be received by Mr. Paul Gubecka, General Counsel and company Secretary, and may be moderated, or if we receive similar questions, may be amalgamated. Due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course and will post our responses on our website. There were 1,852 shareholders registered, holding 31,567,623 shares at 10:00 A.M. on 9 October 2025. The number of shareholders in attendance immediately prior to the commencement Annual General Meeting was 29 shareholders. Now, I would like to explain the voting method.
The procedures for voting will be carried out in the following manner: 1. As disclosed in the notice of meeting, voting today will be conducted by way of a poll on all items of business. As a poll is being conducted, the minutes of this meeting will record the total number of proxy votes exercisable by all proxies validly appointed, the directions in the proxy forms, and the total votes in favor, total votes against, and total abstentions. That's in accordance with Section 251(a) of the Corporations Act. The persons entitled to vote on this poll are all shareholders, representatives, and attorneys of shareholders and proxy holders who hold color admission cards or have logged into the Computershare platform. If you are eligible to vote at this meeting and attending in person, on the reverse of your color admission card is your voting paper and instructions.
If you are eligible to vote at this meeting and attending virtually, a polling icon will appear within the Computershare platform. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit submit or the enter button as a vote is automatically recorded. You do, however, have the ability to change your vote up until the time I have declared voting closed. I now declare voting open on all items of business. The voting tab will soon appear. Please submit your votes at any time. Voting will end within two minutes of the closure of the meeting. I will give you a warning before the closure of the meeting to remind you to cast your vote.
Computershare, the company's share registry, received 86 proxies, comprising 22.5% of the securities issued by the company and totaling 7,101,604 shares, including those received electronically by 10:00 A.M. on 7 October 2025. Of those proxies for Resolution 1, at the resolution report we adopted, 6,935,485 or 97.66% + 1.02% of open board appointed proxies, total 98.68% of eligible proxies cast are in favor of the motion. Resolution 2 to re-elect Mr. Sam Hallab as a Director, 5,788,083 or 81.44% + 1.06% open to board open board appointed proxies, which totals 82.5% of eligible proxies cast are in favor of the motion. Resolution 3 to approve the issue of options to the Executive Chairman, Indy Singh, that's me, 6,503,776 or 91.68% + 1.13% of open board appointed proxies, totaling 92.81% of eligible proxies cast are in favor of the motion. That's interesting.
That's the highest I've ever received from our options. All proxy votes that have been cast at the discretion of the Executive Chairman will be voted for the resolution. No proxies have been declared invalid. The notice of the meeting has been circulated to shareholders and sets out the purpose of the meeting being to discuss the financial report, adopt the remuneration report, re-elect Sam Hallab as a Director, issue 50,000 share options to the Executive Chairman, deal with other business in accordance with the company's Constitution and the Corporations Act, 2001. No notice has been received in respect of any other business. Having set out the business within the notice of meeting, the notice of meeting is taken as read. Minutes of the previous shareholder meetings, copies of the minutes of the AGM4 2024 of Fiducian Group Limited, were reviewed and signed at the next meeting of the Directors.
Shareholders may request a copy of the minutes from the company Secretary if you wish to see them. Now I'll go to the financial report. The first item of notified business is the consideration of the financial report for the year ended 30 June 2025. The consolidated financial report and the reports of the Directors and Auditor were made available on both the Fiducian and ASX websites and issued to shareholders on request. Before dealing with the report, though, I would like to give a short review of the progress and outlook for the Group. Now, that's my address. Dear shareholders, as Executive Chairman and on behalf of the Directors who are in attendance, I'm pleased to present this report on the consolidated operating performance of Fiducian Group Ltd. and its controlled operating entities for the year ended 30 June 2025.
In a year characterized by geopolitical uncertainty, a federal election, and U.S. data threats, all of which make investors nervous about committing to an investment plan, we have delivered a net profit after tax of AUD 18.6 million, which is 33% up from the prior year. Our three operating segments, financial planning, platform administration, and investment management, have remained resilient over the past year and generated higher income streams. This is despite the 17% peak-to-trough fall in the Australian and United States share markets between February and April, which truncated our monthly revenue for those months. Compared with the previous year, net revenue increased by 13% and underlying net profit after tax, our cash-generating capability, grew by 19%. This was reflected in the underlying earnings per share, increasing 19% from AUD 0.5603 in 2024 to AUD 0.6609 in the current financial year.
On other salient matters, Fiducian funds under management, advice and administration, which we call FUMAA, grew from AUD 13.51 billion to AUD 14.84 billion over the year. It was AUD 15.62 billion as at end September 2025. Gross operating revenue rose 11% to AUD 89.37 million, and after the payment of fees and charges, net revenue rose 13% to AUD 68.23 million in the 2025 financial year. The Group remains debt-free in a positive working capital and cash-flow position. There is sufficient retained capital if required for an acquisition or other approved expenditure. Financial planning. Funds under advice grew from AUD 4.8 billion to AUD 5.1 billion over the year. Net inflows from our financial planning activities were AUD 343 million last year, the highest on record, even as the total number of affiliated Fiducian financial advisors was down from 79 to 77 across Australia.
38 financial advisors are salaried and employed by Fiducian, while 39 financial advisors operate as franchisees under our banner, follow our models and procedures, and receive our practice management support and compliance oversight. Our focus will remain on generating inflows through organic and inorganic growth, further acquisitions of client bases that we believe can be quickly assimilated and onboarded, and onboarding of franchised offices that exhibit a strong cultural fit within the existing network. A number of such tuck-in initiatives where client bases are purchased and introduced to our current salaried advisors are being pursued by the business development team, and around AUD 94 million of assets are in the process of being acquired. Excuse me. Fiducian continues to place a strong emphasis on training, compliance, and quality control monitoring of its financial advisors. It is an expensive proposition, but we believe it is necessary.
Face-to-face meetings with clients are now starting to blend with digital engagement and video conferencing, which saves clients time to travel, allows financial advisors to lift productivity, and may also increase the number of clients they can service efficiently. More recently, we have introduced AI or artificial intelligence in statement or advice preparation, technical research, and record keeping. Superannuation. The Superannuation Trustee Board established the Fiducian Superannuation Fund, a public office superannuation wrap fund, in March 2015 with a majority of independent directors, operates professionally and with independence. The Trustee Board, with an independent Chairperson, Drew Vaughan, who is doing a fantastic job, is functioning well and carrying out its duties diligently. The Board is supported by the Office of Superannuation Trustee. The tenure of some directors will end in 2027.
In preparation for this transition, two persons have already been appointed to the Board and have begun attending meetings to familiarise themselves with the operations of the Fund. The Fund outsources key operational processes to specialist service providers and, in particular, to ensure accuracy of reporting, has recently engaged a Big Four accounting firm and installed new reporting software to review and prepare data to be reported to the regulator. As always, cybersecurity remains front of mind. Support services. The success of financial services business can be measured by the quality and reliability of its support services. These services are provided by Fiducian Services Private Limited. I think it is appropriate now for me to ask Rahul Guha, who is the Executive Chairperson of FSL, to present his summary of how he saw the services delivered and what he sees for the immediate future. Rahul, can you please come up?
I'll continue after he finishes this.
Thank you, Indy, and good morning, all. Fiducian Services or FSL provides support services to the Group's external clients and internally to other parts of the business. These services include platform administration, IT, finance and HR, marketing, legal and compliance, risk management, and the Office of Superannuation Trustee. At Fiducian, we have always acknowledged staff as our most important and valuable asset, and we continue to nurture and help them grow personally, professionally, and into positions of responsibility. Fiducian is proud to be an equal opportunity employer with staff from 27 different countries of origin. It endorses diversity and currently has a number of employees that bring different skill sets from their countries of origin. Our strategy to view our staff as a large Fiducian family standing alongside each other in difficult times has held us in good shape. Management has accepted the worldwide transformation to a work-from-home environment.
We also understand the pressures posed by the cost of living crisis our employees are facing and have provided increases in salaries and bonuses to help them cope. Platform administration offers portfolio wrap administration for superannuation and investment services to financial advisors, and as well, it separately manages accounts or SMAs, which offer investors access to a selected number of shares and funds that are managed separately for them. We strive to differentiate ourselves from our peers through the quality of service we provide to the financial advisors accessing our platform and their end clients. Over the years, we have built a scalable platform that aims to deliver a service level exceeding industry standards and functionalities that increase advisor and client efficiencies and productivity. Our administration system is comfortably servicing the different requirements of external independent financial advisors who have chosen our IFIT product auxiliary instead of established players.
The Fiducian Information Technology Development and Business Analysis team of approximately 15 internal staff have been busily working from both home and head office to provide system enhancements that deliver efficiency and wide-ranging functionality to our proprietary system, FOWS, our financial planning system, FasTrack, our platform administration system, and Fiducian Online, our front-end system and client reporting tool. We have recently launched the Fiducian app and have a number of key projects in training to enhance our SMA capabilities and client functionalities. The use of AI integrated in our system and processes has resulted in improved productivity in our development releases and advice delivery lifecycle. Cybersecurity and protection of our systems remain in front of mind with two-factor authentication, stringent password policies, and several other security measures in place.
Fiducian does not capitalize IT expenses, thus mitigating the risk of higher amortization costs in future years that may otherwise adversely affect the profitability of the Group. The Finance and HR teams are responsible for the financial and regulatory reporting, payments of advisor and other supply payments, analysis of all acquisition and other business expansion opportunities, recruitment, and people aspects of the Group. We have recently strengthened the regulatory reporting process through additional resources, implementation of new reporting systems, and appointing a Big Four accounting firm to review reports prior to lodgment with the regulator. The Marketing team, together with the Practice Managers, are focusing on helping our financial advisors lift their revenue, attract more clients, and build their businesses. We have seen increasing success in generating organic leads through our local area campaigns, sponsorships, social media activities, targeted direct marketing, and by building brand awareness.
Managing risk and compliance remains one of our topmost priorities, and the in-house Legal and Compliance and the Risk Management teams, complemented by external special resources from top-tier firms where required, are fully focused to protect the business and comply with the credential standards and other regulatory requirements. The Office of Superannuation Trustee, headed by our new General Manager, is the conduit between the Trustee Board and the rest of the Group and is functioning effectively to provide the ongoing support to the trustees and assisting in meeting regulatory expectations. While we are on a constant journey to enhance our services, we may not get everything right every single time, but we act proactively to rectify and remediate matters when things don't go as planned.
Our objectives have been to put clients' best interests first, work collaboratively with the regulators, and most of all, learn from our experience to make our organization stronger and better prepared for the future. Thank you all.
Thank you, Rahul.
Done, mate.
Thank you, Rahul. That's a good presentation, and I think coming from the horse's mouth is always better than from me. Now, funds management. Our in-house manager-manager system of investment continues to attract the majority of retail funds placed with us. Conrad Burge, who is Chairperson of Fiducian Investment Management Services and Chief Investment Officer, provides oversight and has done an excellent job and caused us to deliver to our promise. Our clients can be defined as long-term investors since they are invested to build over many years the Superannuation and Investment assets with us. Generally, when a person comes to Fiducian, they're looking for a 10, 12, 15, even longer tenure with us and our advisors because superannuation can go all the way up to retirement and beyond. That's why I say they're long-term investors.
We are not ones to boast or advertise investment performance, but for the first time, I have presented my Directors Report with the financial statements, a table showing our performance against global and Australian funds. It shows that we have delivered better than most, if not almost all, competing funds at times over rolling seven and ten years. I choose seven and ten years because that's where it starts to get long-term. If you can read that there, which is harder than it is for me, I at least have the data with me. In their respective categories, I think when he says modestly have performed well, I think ranking second, and if you go back to seven years, we're a simple multi-manager. June 19, 2021, 2022, the Growth Fund was ranked number one out of all of Australia, which is an anomaly actually for our kind of management.
We're not doing something wrong. Maybe the others who we use to manage our money are doing something not quite the way we do it. He's pretty modest, and he says we diversify their assets through a range of carefully selected and blended underlying fund managers to reduce risk and volatility. We aim to deliver above-average returns with below-average risk through the combination of some 26 different underlying fund managers in our flagship diversified funds, which hold around 60% of our funds under management. That's important. Just above-average returns, below-average risk, we don't intend to shoot the lights out. If the results are good, we're doing our job. On the economic and financial markets. On the current economic environment, the Australian economy grew by a modest 1.8% over the year to 30 June 2025. Much of this growth came from government consumption spending up 4%. Household spending rose by 2%.
Clearly, cost of living pressures have continued to weigh on households with still rising housing prices sustained by high levels of immigration posing a challenge for young families. On a per capita basis, the economy has shown nine quarters of contraction out of the last 12 quarters. Assuming that inflation remains contained and given the weak state of the economy with no productivity growth, further rate cuts appear likely pushed out over the coming year. When there's no productivity growth, people feel a loss of wealth. When the per capita income falls, you had stronger buying power. Now, with the costs up and your salary the way it is, it becomes harder for people to maintain their standard of living.
According to the latest estimates provided by the International Monetary Fund, global growth is holding steady and is forecast to be 3% this year and 3.1% in 2026, largely driven by developing economies. This is in spite of escalation of trade tensions and policy uncertainty. Growth in the advanced economies is forecast to be a moderate 1.5% this year. The bulk of that global growth is coming from developing economies. In the case of the United States, the Fed has recently cut interest rates, and should inflation remain controlled, more cuts could occur. The IMF is forecasting growth of just 1.9% for the whole of 2025 and 2% for 2026, although the U.S. administration is aiming for a higher rate of growth through new fiscal stimulus, reduced regulation, and incentives for investment. Growth for the Eurozone and Japan is forecast to remain weak.
In anticipation of future interest rates to come, most major share markets rose last financial year until the March quarter when tariff increases were announced, causing a sharp fall. As I mentioned before, our market fell 17%. Subsequently, these tariff increases were paused, and share markets rebounded strongly. By 30 June 2025, most markets were well up over the half year. As a result, client portfolios have in many cases risen in value. This year, we feel could also bring positive results for clients, particularly if interest rates continue to trend downwards in most jurisdictions, inflation rates continue to drop back towards central bank targets, and average corporate earnings continue to grow. In these circumstances, yields on fixed interest securities, that is, bonds, should also decline and deliver capital growth and positive returns for investors.
As always, we recommend that investors should consult a Fiducian financial advisor to develop financial plans with the aim of achieving diversified investment strategies that over time could help investors realize their financial goals. Now, this is a disappointing matter I have to speak about, a civil proceeding. As announced on 3rd of October, ASIC has commenced civil proceedings against Fiducian Investment Management Services Limited as a responsible entity of the Fiducian Diversified Social Aspirations Fund. The fund ceased to operate in May 2024 due to lack of scale. The fund invested client monies in two underlying funds, and upon closure, investors with almost 75% of the money invested elected to be transferred into the same underlying funds where FIMs bore the cost if there was a buy-sell differential to help the clients.
About 20% was moved to other Fiducian funds like the Growth Fund, Ultra Growth Fund, and around 5% or what less percent might have just been left maybe for personal reasons. FIMs has fully cooperated with ASIC's investigations to date. Other than the information provided in the announcement, there is not much further I can update on this matter at this time since the matter is at the court. The Advisors Council that we have is comprised of franchised and salaried financial advisors who provide their services to counsel voluntarily. It has made a significant contribution to the company during the past year as a sounding board for the company's management and boards and is a valuable resource and forum to alert us to financial planning issues and improving force of financial planning software, FasTrack, our administration system, and our online reporting capacities.
The Board of Directors and Management have worked together cohesively as a team with respect and candor for each other, but with a clear mutual understanding of each other's roles and responsibilities in achieving an optimal performance. I'll talk a bit about giving back to the community. Fiducian has continued providing support to community organizations and sporting teams linked to our financial planning network. We currently sponsor 40 sporting clubs and educational associations across Australia. Julie is our Marketing Head, and she's sitting at the back, and she's responsible for expanding this service. Well done, Julie. For the last five years, we have supported the Junior Development Program at Avondale Golf Club in Sydney. While our contribution is modest, we are proud that a couple of young lady golfers have qualified for the USL PGA, and one of them recently won a major title overseas.
Others are representing Australia and New South Wales as amateurs and have become national champions or are turning professionals. That's a great result from that. Vision Beyond Ours, a charity supported by Fiducian Group , has continued its service in hospitals in India, Myanmar, Nepal, and Cambodia. Around 60,000 men, women, and children who live in abject poverty have had their eyesight restored. In addition, surgical equipment has been donated to overseas hospitals. 18,000 children have been screened for eye disabilities in rural areas of Nepal. Fiducian staff voluntarily provide accounting, administration, and marketing support to Vision Beyond Ours to ensure that every single dollar contributed by generous donors goes towards eliminating sickness and visual impairment for some of the poorest and financially disadvantaged on our planet. The outlook is consistent with our strategy over the last 20 years.
Our focus remains the establishment of a business with a rock-solid foundation and growth strategies to enable upscaling on existing capacity and leveraging our controlled, relatively low-cost base. This strategy has benefited us in difficult and uncertain times with increasing revenues and growing profits. The Board's aim remains to build scale and deliver consistent double-digit earnings growth over the long term, and management is determined to stay committed and focused to try and achieve this goal. On behalf of the Board, I would like to thank all participants for their individual contributions to the growth and success of Fiducian. Thank you. I see I moved to my address on the... This is the table. Now, please provide your questions, if any, via computer-shared platform, and we will address them shortly. That's just a reminder. The next item is the adoption of the remuneration report.
The remuneration report is set out in the 2025 annual report on pages 19- 26. The vote on this resolution is advisory only and does not bind the Directors of the company. However, I note that pursuant to the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the remuneration report at two consecutive AGMs, shareholders will be required to vote at the second AGM on a resolution called a spill resolution for another meeting to be held within 90 days of the second AGM at which all of the company's Directors, other than the Executive Chairman, must stand for re-election. The following ordinary resolution is proposed in the notice on meeting that the remuneration report is adopted. Again, please ensure that you have voted on the computer-shared platform.
I'll now move to the next item of business, the election of Sam Hallab as a Director. The next resolution concerns the re-election of Mr. Samir Sam Hallab as the Director of the company. Mr. Hallab's personal details are included in the explanatory memorandum attached to the notice on meeting. The following motion is to be passed as an ordinary resolution that Mr. Sam Hallab, being a Director, retiring by rotation and being eligible for re-election, is re-elected as a Director of the company. I again remind you to please ensure that you have voted on the computer-shared platform. Finally, Executive Chairman of my options. The next resolution concerns the shareholder approval for the issue of the Executive Chairman of 50,000 share options. The basis for the issue of the options was outlined in the explanatory memorandum attached to the notice on meeting.
The motion, which is to be passed as an ordinary resolution, is that approval is given pursuant to ASIC Listing Rule 10.14 and for all other purposes to grant Mr. Indy Singh 50,000 share options to acquire ordinary shares in Fiducian in accordance with the terms of his employment agreement at an exercise price of AUD 9.30 per share and to issue shares subscribed for pursuant to the options. Again, I remind you to please ensure that you have voted on the computer-shared platform. Other general business, as I understand, no notices have been received to deal with other business in accordance with the company's Constitution and the Corporations Act. Now, to questions. As there is no other business, we will turn to any questions that shareholders may wish to ask the company.
As part of our notice on meeting, we ask shareholders to send questions to Computershare for our response today. Our company Secretary, Paul Gubecka, will now identify any shareholders from the Computershare platform who wish to ask a question, and then you will have the opportunity to ask your questions.
Yes, there's several questions in from a number of shareholders. The first question has come from Mr. Steven Vine, and it is to you, Indy. It is generally not considered good practice to have an Executive Chair, particularly one who then is granted management style options. After a great year with its market cap approaching AUD 400 million, have we thought about moving to a conventional governance model with an independent non-Executive Chair?
Short answer is no, we haven't. The Board is happy that I'm the Chair, and the options that I get generally are not free options. They are only available to me after the company has achieved an earnings per share or share price growth of 15% over the year. It is only after that 15% has been achieved that for every increase I get some options. For every percent, I get 1,000 or 2,000 or whatever options after the company has achieved an earnings per share or share price growth of 15%.
Another sectoral question from Mr. Steven Vine. Do any of the proxy advisors cover Fiducian, and have they made any recommendations in relation to the votes today?
Do they?
In relation to the voting for today.
Any proxies?
Proxy advisors.
I think normally the institutions go to a proxy advisor and ask what should we do, and normally the proxy advisor would say no, don't vote for it, say go vote against. This time, I think given the level of voting, most have probably said the institutions have said we should get the options. In fact, I can say there was a shareholder from the United States who called yesterday and he said we're going to vote for the options, though whatever we've been told by our compliance said that's up to you. We can't say anything about it.
There's another question from Mr. Steven Vine, asking in relation to the ASIC proceedings.
Yes.
He's saying have we hired a legal team, and were we surprised to read the court documents? Did you know it was coming? Were there negotiations to settle the matter before the court action was initiated?
We were taken aback, absolutely surprised that it even came. There was no discussion with us to cancel or negotiate. We had been talking to them. It was all general conversations, and then out of the blue, we learned that they had lodged a court. Yes, certainly we have. First thing we did was talk to HSF. My ethos and my belief is that the regulator is there to help business, to help the economy grow, to make sure people have employment, their profitability occurs, and I'm not one to fight a regulator. Whatever happens, I have this feeling that the regulator should and will eventually do well for the nation. We are preparing ourselves. If it can be settled, it'll be settled, and I think any reasonable regulator would see what's happened. I don't doubt a regulator's ability, and I respect the regulator, whoever it may be.
One final question for Mr. Steven Vine before we go to the other shareholders. The Chair has been prominent in the media in the past discussing economic conditions and opportunities in India. How important is the growing Indian diaspora in Australia for our business? Was the Chairman concerned about recent comments about migration from coalition senators and their discussions? Is there an opportunity to repair relations between the coalition and Australia's migrant Indian community?
That's a big question for me. I'm not a politician. Yes, we've seen things. I don't know if it was directed against Indians. It was more about excessive immigration, just bringing people on where there's no housing, insufficient roads, and schools and things for people. We have an India Fund. If Mr. Main would like to invest in it, it's done quite well, and we welcome him to talk to a financial advisor before he comes in so he can get the PDS and a research note on it. We haven't seen any problem with the Indian community. We have a few people, including myself, in this company, and they're hardworking a lot. The Indian economy is certainly growing, as Mr. Main says. I think it's going to soon become the fourth largest economy in the world in about a year or two in terms of GDP.
We look forward to that, and we are invested there. Our clients have money invested there, and we'll hopefully capitalize on that growth. Mr. Main, you're more than welcome to talk to one of our financial planners and capitalize on that.
Now, we've got two questions from Mr. Claude Walker. One of them is directed, both of them are directed at Mr. Sam Hallab. The first question is directly with respect to the details of the ASIC proceedings. We won't be answering that question because Indy's responded at this point with his Chairman's address. In relation to a specific question to Sam, as Chairman of the Compliance Committee, what measures has Mr. Hallab taken to minimize risk in response to the recently announced ASIC proceedings against the company?
You have got to understand that was more an investment issue, and as the regulator said, the product disclosure statement issue having some gaps in it. Is there any other question that the members here might want to ask about the aspiration fund chart and combine them?
No, that's the last one.
Okay. Is there anyone here? John and Bob got up, so.
I'd just like if you were able to, in a court matter, whether you could just figure out how the Aspirations Fund was formed and how it proceeded and then why it was closed. Just so we as shareholders get a better view of what it's all about.
That might dovetail into what that question. Go on, John.
Can I ask, were any of the underlying funds that were invested in breaching ESG, breaching an ESG mandate?
Not that we know. If you have never heard about anything like that, we review them and update them regularly. This was the only one which had an ESG source code filter, and there was just one, two questions, not even complaints, where we were asked, why is there BHP in this fund? Our Head of Investment responded to the client and said it's part of the mandate that the underlying manager has. I think Bob's question is very valid. I can answer from there. Why was it formed, how was it formed, and why was it shut down? We were being nudged to have more ESG in our products, whether it was regulated, whether it was people's mob, the other thing. We had to give them something. We already had Perpetual ESG fund on the platform, but we were getting nudged to put more. We didn't see any demand.
There was really no demand. If we had to put more, what would we do? Put another Australian one? We felt that it would be best to give people a greater exposure by combining one fund which had exposure only to international companies which complied and one fund that complied with Australian companies so we could put a wrapper around them, combine people who already had ESG controls, specialists, everyone, and that an advisor then without having to second guess would find it convenient that if the client asked for ESG style investment, that through one investment they could get both international and domestic and didn't have to worry about which one more or which one less, and Conrad could tilt whichever fund he preferred. That's what we did. Subsequently, we ran it for over eight years.
There were only two months, if I remember, we made some money of AUD 60,000. You don't run a fund that way. We were losing money every year. We wanted to help our clients, so we continued. It came to a point after eight odd years where we said this is ridiculous. We lost AUD 800 or AUD 1,000 over this period, and there's no sign of ever making money again. We went back to the clients and said, look, we're closing this fund. Most fund managers would say, sorry, fund closed. Take your money, do what you like. We've had that done to us by BT and by Colonial. Sorry, we're closing this fund. We'll give you the money. We went back to the clients and said, you have asked our advisors, and incidentally, every single client investor in this fund came after meeting with a financial advisor. They asked for it.
They were then proposed to go in, and they were given a PDS and a research note. The research note had all the exclusions, and I'll explain what the exclusions are. Anyway, we went back to them and said, in this fund, if you had AUD 100 and there was AUD 55 in, say, the international and AUD 45 in the Australian, we will transfer your money directly to these two funds, AUD 45 in the Australian and AUD 55 in the international. If there is a buy-sell differential for you, we will pay it from our pockets. No client will suffer. 75%- 76% said, yep, we want to go there because we like to stay there. 20-odd said, no, I want to go to the growth fund or ultra growth fund or managed fund, and only a few left. Good for them. It's their money.
That was the end of it as far as we were concerned. No one suffered. The fund returned something like 7.8% or something. I can't remember over that period. People made money. Overall, they got 68% from the starting point, and they were all happy in these funds. Now, as I said, I respect the regulator, and there's obviously been some where they see that someone has said, why was BHP there? All these funds, if you look deeply into their PDSs or product disclosure statements, have an annexure where they include something called exclusions. Read the exclusions carefully. No one reads them. We had those exclusions in our research note, but it was not part of the PDS, and that's one of the causes of contention.
The exclusions will say we can have up to, we will invest in companies that have up to 30% of their income from uranium. We will invest in companies that have up to 10% of their earnings from alcohol. We will invest in companies which have up to 5% in gambling of their income. Those are the exclusions. The point I'm trying to make is we didn't choose the securities. The underlying fund managers who are experts, who have ESG controls, who have all those supporting people, chose those securities within the mandate and their ranges that are in their product disclosure statements. Those funds, all three of them are still operating. Perpetual's operating, Candriam, which is overseas, which is proposed by Hospel, is operating, and Xolaris is also. We ranked them from when I was at the conference. I said, Conrad asked, are you still operating?
I said, yeah, we are. What? You have breached something? No, we haven't. Somewhere there's a miscommunication. No client has lost money. Those funds are still operating. People are still sitting in those funds. Those who left got out of the S ocial Aspirations Fund and opted to go into these two options. They're still there, earning money, paying a little lower fee, still with our financial advisors, no complaints. Now, as I said, I respect my regulator, and they have their versions, they have their reasons, and I hope we can talk to them and discuss with them to say this is why it's happened, this is what happened. No one came on their own. It's not that we pushed the product out to entice people.
Everyone went in with our financial planner who explained that there are these two funds underneath, and this is a research topic which has certain exclusions. If people don't understand those exclusions, when we looked at the three funds we had, all of them had small exposures to BHP, Rio, Orica, the one overseas was Shell AG or Shell PLC, BHP PLC. That's the way these funds run. Sometimes it could be misconstrued the way it has been that someone wrote, and Conrad replied to that person and said, no, it's within the mandate. They're entitled to have no more than 0.5% of something in BHP of the portfolio. I don't know what it is, but within the exclusion level. I certainly don't like getting into a fight with my regulator if the gentleman has asked that. I've never fought the regulator.
I have always accepted the regulator, and if they believe we have slipped somewhere in the document, a paragraph, or that something that can be construed differently or what has been written, then they want to punish me. I'll take the punishment. I'll say, I'm sorry, forgive me.
It's fair to say, Indy, that no funds were put into a fund that was not an ESG fund, and none of the underlying funds, as far as you're aware, are in breach of their...
Right. Absolutely right. Yeah.
Thank you for the explanation, Indy. Just an idea of how many clients, investors were in this fund and were affected by it.
In total, 158 invested in this fund. As I said, about 75%, which would be 110 or something, opted to stay in these two products with our advisors. About 30 or so would have gone into the growth fund or balance fund, and a few might have needed money or whatever left, and that's normal. They're still there in the same funds. Now, yes, we could have been at fault where the documentation in the PDS might not have reflected what someone thought, but no one went on their own. Everyone through a financial advisor, and the financial advisors were trained and knew what it is to explain that there are two underlying, this is what they can invest in. As I said, we were taken totally by surprise because normally we expected they might talk to us, give some infringement or something, but it was straight to court.
This has been going on. They've been having meetings with us, three, I think. One with us here, one with Paul and Conrad, and then another one with individuals. They've asked lots of documents from Paul, so we sent them all. Finally, they asked something about our software, which we sent that, and we thought that's wrapped up. I got this, which is very disappointing for me because I was very upset. I pride myself on being squeaky clean. I pride ourselves on being totally transparent. I pride ourselves on making sure client best interest comes first, not us. As we did, even when they were going into these products, we said, we will pay your buy-sell differential. Don't worry. They all went into the same product. I can't say much more. It's in court. Of course, we've chosen a lawyer.
We have talked to people, and what happens will not burn the bank, I hope, because we have sufficient cash. While I don't want to lose shareholders' capital, sometimes it might be better to say, yeah, okay, blame us. We're sorry. Do what you have to, but please let this go away. We want to continue in our business. The business is growing. I just told you how what the FUMAA has gone up by AUD 700 million over the last period only. The new people are being acquired. Jazz team's done a great job in distribution. We've got about AUD 90 million odd where they've negotiated that we will, unlike normally paying upfront, we're not paying. When the client comes across, moves across, we pay. No problem after that. People, we're buying business from charging crazy fees, and we're reducing their fees.
We're reducing their fees and giving them diversified investments. These are from big financial planning businesses. We're getting hopefully more. We've got some big conversations going on with businesses that want to use Auxilium. One person said I've got AUD 1,200 funds. One person said I've got some, and I can't. They haven't come to fruition, but they've approached us. It takes time. As David, you run a big business, you know that when we start Auxilium, people put AUD 1,000 or AUD 500 or AUD 2,000 because they're testing the waters of the capacity. Now they're building and putting higher volumes and it's coming along. I won't say there's momentum. I'd say that we're getting traction. The team's working very hard. Next step, if we get 500 or 700 people to use Auxilium, we'll introduce force. Use the software.
To get them for 50 people, 30 people is more expensive than getting any revenue out of it. There's opportunities and we're working hard. We keep going. This is a hurdle, I suppose. If the regulator says, "Matt, you've done this wrong," I'll say, "Yeah, sorry. I beg forgiveness." I'll move on. I don't want court cases and that go on for two years. If you win, you still lose. You'll never win against the regulator. That's my philosophy. Sorry this has happened. Long story. It is disappointing to us and our shareholders, but business is going on. Business is going well. It's growing and we'll continue. Sorry, that was a long answer, Paul.
That's okay. Mr. Claude Walker wanted to answer the question, so I'll repeat. He wants me to repeat it again. As for this, this is for Sam, Mr. Black, what has he done to minimize risk in response to the recently announced ASIC proceedings against the company?
Okay, back to risk. We have a Chief Risk Officer. The Chief Risk Officer looks at all our potential risks and gives a report every quarter after reviewing and researching every part of our business, from IT, administration, legal. She reviews, even comes and checks on your assurances board and mine, and gives a report on where we stand in our risk management framework. That goes to the ARCC. The ARCC has been advised that this has happened. The ARCC is aware. The committee doesn't go and do this work. The Chief Risk Officer and her team do that work. Committees and boards ask the question. In the media, every time they say, "The director should have gone and done the administration," it doesn't happen that way. The director must ask, "Have you done it properly? Have you got the systems? Have you got the processes?
And are you following those processes?" The media may say anything about the responsibility of the director or the auditors complying with. They check it, they review it, and they want to know to be kept updated. In fact, we had a meeting as of last evening only, I think, where I briefed the ARCC on our discussions with the law firm. They gave recommendations on what action we should take, who we should talk to. We're following that. Action has been taken, and I think the Audit Compliance Committee has delivered those promise.
There's one more for questions from a shareholder, Peter Jones. I've combined two of them. Will the company be releasing the Appendix 4C cash flow today? If not, can you provide an update for quarter one of FUM and FUA?
Right.
I can respond to that.
Why can't one stand up so they can be heard?
No, thank you, Andy. Thank you, Paul. In terms of the quarterly FUMAA, as Andy has covered in his reports, the FUMAA, which is Funds Under Management, Advice, and Administration, stands at AUD 15.62 billion as of end of September. In terms of the ASX 4C, we do intend to announce ASX 4C in the next couple of weeks. In addition to the FUMAA, we'll also reconfirm our cash flow for the first quarter, and that will be announced in the next couple of weeks. Thank you, Paul. I have just one more question.
Yes.
For Andy. Given the last question, given the extra ethics scrutiny on platforms and the increased requirement of the platform provider to examine underlying investments, does this change the investment case for platform development?
Another long answer, but look, just to understand about platforms, there was a time we had superannuation funds and we had people investing in retail products. David and others who have been stalwarts of the industry would know. People were investing in a BT share fund or a Colonial property fund, and they couldn't collaborate and collect all that data. We came up with a thing called the IDPS, Investor Directed Portfolio Services, where you could put all these products on a platform and you would get one statement along with your tax statement. You'd get one collection of all the investments you had and one tax statement. There were some issues coming with that, so I think the regulator changed that to make the IDPS a product, which made the responsible entity more responsible for the product.
Ever since things have been happening with Shield and others, they are now taking more scrutiny and being more careful. In our case, the investment team, Conrad, Sebastian, they review all the products that external financial planners want to put on the platform. They review them. After they've reviewed them, they've checked the, as they're saying now, that research house ratings are not sufficient. I suppose that the regulator will soon realize that the platform is not a research house. We have to go on someone's data, but we can research the product ourselves. However, we are very, very compliant in terms of the action we take. There was one particular product that we found had not issued the repayments, the payout to a client, or your price was coming late. We immediately closed that straight away and wrote to the members and investors, "This is closed.
There are some concerns we have about this product." You can't tell people to get out. Because if they do get out and the thing does really well, they can come back and sue us and say, "Why did you get me out of this?" We can only alert them to it and inform them there's something not right. We're closing it to no one. I have not really spent too much time thinking about it, but certainly, it will have some impact on inclusion of products on a platform because a lot of platforms are getting afraid to even put anything on, given what's happened with Macquarie and Equity Trustees. These two funds failed and people lost their money, they came to us. Shield came to us. We said, "No, we're not putting you on. Sorry, something's wrong." Straight away.
We said, "We cannot have you on our platform." They seemed unhappy, but bad luck. I think it will change the way the landscape works because people will start to become more restrictive on what products go on. It may affect the investment industry, where small emerging funds that are doing well, that may be reasonably well capitalized, may find it hard to exist because they can't get on to platforms. We are coming with solutions for people where people can treat them as shares of products, and we just developed the algorithms for that. We've released on September, final testing. That could be a good situation for us where people want to use just shares.
FSC has come out with a document which says anyone who wants to do investment management needs to have 36-something policies: research people, compliance people, risk officers, quality assurance, dispute resolution. It may be good for the whole industry, but I think some smaller ones will struggle. That's my first gut feel. Maybe they won't. I can't say it. Platforms certainly are in the firing line now. They used to go for the advisor. The advisors used to be 80%. The big boys, AMP, DHB, AMP, four banks, MLC. Now the tables have turned and there's about 50%-something, almost 60% small IFs. The moment a question is asked, they will say, "Sorry, I'm insolvent." Who do they go for? The superannuation money, which advisors have used, so they're putting the heat on trustees. Our trustees are doing a great job.
It's hard, literally, I can tell you, to get a product for Auxilium on a Superannuation fund. They're so tough. It goes through the investment team. It then goes to the investment committee. Once the investment team is happy, the investment committee has got to be happy. If there are changes that need to be made or rejections to be made there, then it goes to the FIMS board. If the board says, "Okay, we'll accept it," then it goes to the investment committee or superannuation. They can still reject it. After that, the investment committee says, "Okay," then the trustees say, "Okay." It's become tough. I might just add, already I've asked Sebastian, "Sebastian, you might stand up." He's the number two to Conrad .
Very bright young man, except the fact that he holds his little daughter on his shoulder that stands under a tree. I said, "Better get a helmet on her." He's very tough. I don't know this fund manager, sorry. I said to him yesterday, "I want to see the job specification of the person. I want you to look for someone who can back you up to look at these products, to check these products, report on these products just as a separate person. An expensive proposition. Can't take a chance." Everything we've done is preemptive. I think Rahul spoke to some installs. Just last year, last month or two months ago, the biggest so-called hero super fund got hacked.
Now they're looking for multi-factor authentication, which means when you want to access your account, they send you an email to your phone and say, "Was it you?" We had it how many years ago?
About four or five years back.
Four to five years ago, we have to be so careful because our size, shareholders, and be preemptive on almost everything. That's why I said before any rules come out or anything from ASIC, get someone straight away. Doesn't matter what it costs.
No more questions.
Any other questions from the floor? Yes, sir.
Andy, you mentioned briefly in your report about AI.
Yes.
Can you give us some more thoughts about the opportunities that AI might draft to the mission?
Yep.
Perhaps at the same time, where do you see some of those threats?
A bigger plan prepared to?
The threats from AI.
Yeah. Now, I want you to look. The AI is quite a misquoted term for an engineer. Artificial intelligence means you have 10 to the power of 26 permutations and commutations, which would need a computer bigger than this building. A brain can do that. What we use is machine tools which augment our thinking and support our thinking. Our IT team, we've been working hard to get something. We chose Teams, Microsoft, and what they've gone for our planning, financial planning, really. In the software development, they're already using it to get the coding right. The coding hasn't been always right through AI. That's the threat. It comes wrong. I think I'll start again and do it manually or do it somewhere. With planning, it's worked out better. The moment you discuss with your client, it gets recorded. You ask it to summarize, it'll summarize it.
You ask it to tabulate it, it'll give you a table of all the data, total everything. Calculate returns, everything, it does all that. Saves a lot of time. At the conference, there were two presentations. One was an advisor who got a client and he's eventually sent it back because the client was paying AUD 18,000 or AUD 19,000 of tax more than they should have. He's going to talk to your previous advisor. The amount of research he had to do, ASIC, tax office, all that stuff, you were there. All that stuff, I said, how much time has this guy spent to send the client back? With AI, you can actually pull up the various matters that are relevant to this case. You have to know yourself which one is actually relevant. That doesn't mean you don't get trained.
Where the threat is that people aren't trained, don't understand, what's going to happen, they choose the wrong one. The moment ChatGPT came out, a little distraction was interesting in Canberra. I asked our previous Sebastian to write a poem about fiduciary for the clients at Christmas, how well they're doing. They came out with six or eight paragraphs. I said, I just want four paragraphs. Four paragraphs. That's too long. Okay, let me read the last paragraph. The last paragraph comes out, "And while you sit near the fireplace and look at your grandkids and see the Christmas tree and you're opening your presents, you can be sure that your funds and money are doing well thanks to fiduciary." Something like that. The computer didn't know that in Australia there's no sun and there's no ice and no snow and no fire at Christmas.
You get garbage in, garbage out, which is a threat. How far AI goes, as they say, gets to singularity, and we can talk about this for days. Will it affect humanity? Will it affect our ability to control? It's what we put into the system. The jury is out on how far it'll go. It's very interesting reading. I don't know if you see about the universe, and we don't even know how big it is. We thought it was our solar system, and now they tell me there's billions and billions of galaxies bigger than us, and there are more stars in our little universe than every grain of sand on every beach in the world. Stars. Things are, you just don't know where the world's going. Yes, David, please.
Yeah, it looks like Gary prefers it. It's me with a little negative focusing on what is the small problem. You've done really well this year, too, with AUD 89 million revenue, despite all the markets and the mess you do with that. Let's get a perspective. That's AUD 16 million funds out of the nearly AUD 16 billion that we've got under management. If it played a whole lot back, it won't, but it's not going to create a ripple. I'm hoping that we are standing here next year with this company continuing to thrive and you celebrate breaking through AUD 100 million revenue.
True. Thank you, David. Now, those of you who don't know David, David was my partner when I started. If it wasn't for him, you wouldn't have had Fiducian. David also is the first person who started commissions. We used to charge 1.32% ongoing. Every platform, when they went to the Royal Commission, all the Johnny-come-latelies had not even known about that. They sent all these young people who had never been around to answer questions they couldn't. The whole thing went turtle. David started that if you have an advisor who's looking after you, then we as a platform should give some money to the advisor. It became called Trail Commissions. David Smith. You can blame him for it.
In fact, there were people, I remember this, Taylor Bowring, the advisor, he would not invest until he got a trail, and they started calling him Taylor Trailer or something like that. David started it. Now, all of us, we're talking about income, retirement income. Who started account-based pensions? Can anyone guess? David Smith. He called it cash-back pension. Now, who started self-managed super funds? He called it DIY. I remember the brochure he pulled out. It had little blocks. DIY, like a kid pulling blocks together. So when David says you've done okay, I'm, geez, I can sleep easy now. David, thank you so much for your confidence. Any other compliments? Thank you so much for being here. Thank you all those who are on the computer, on the website, and who have come online. Thank you so much for taking your time out. Thank you, Mr.
Mann, for your questions and all the others. Really appreciate it. It shows you care about the business, and I assure you we care about all of you. We will continue to work really hard. This unfortunate incident hopefully will be away, and we will continue to grow the business. Please join us for the used-to-be biscuits and coffee. I can see there's cakes and things, so we've improved definitely. Thank you so much.